CT­LA-4 bound for the clin­ic, Bris­tol-My­ers hands Cy­tomX $200M to kick off an ex­pand­ed dis­cov­ery pact

Sean Mc­Carthy, Cy­tomX CEO

Over the last three years, Bris­tol-My­ers Squibb has been steer­ing four pre­clin­i­cal dis­cov­ery pro­grams it part­nered on with South San Fran­cis­co-based Cy­tomX, mov­ing the lead CT­LA-4 an­ti­body to a near-term IND fil­ing with an eye on first-in-hu­man tri­als.

And now Bris­tol-My­ers is sign­ing up for eight more projects — six in on­col­o­gy and two more out­side of can­cer, as Cy­tomX push­es ahead in the clin­ic with a PD-L1 check­point the CEO be­lieves can blitz its way through a pack of ri­vals and in­to the spot­light.

Get­ting this deal done calls for a $200 mil­lion up­front, plus up to an ex­tra $3.6 bil­lion in mile­stones as well as roy­al­ties for any com­mer­cial­ized ther­a­py, bring­ing Bris­tol-My­ers’ in­vest­ment in­to Cy­tomX to $257 mil­lion in cash, with close to $5 bil­lion in goal mon­ey on the ta­ble.

For a dis­cov­ery deal, that’s a sub­stan­tial wa­ger. And in­vestors re­act­ed warm­ly to the news, dri­ving up shares by 24% Mon­day morn­ing.

“The work with Bris­tol-My­ers is go­ing very well,” says a pleased Cy­tomX $CT­MX CEO Sean Mc­Carthy.

The deal comes at a crit­i­cal time for Bris­tol-My­ers, as it wres­tles with set­backs for its PD-1 check­point drug Op­di­vo. And there are im­pli­ca­tions here for the fu­ture of Bris­tol-My­ers’ all-im­por­tant im­muno-on­col­o­gy fran­chise.

Cy­tomX’s claim to fame rests on its Pro­body an­ti­body plat­form. The com­pa­ny has de­signed an an­ti­body that links on to dis­eased cells, leav­ing healthy tis­sue alone, with ac­ti­va­tion in the tu­mor mi­croen­vi­ron­ment.

The biotech has its own PD-L1 check­point that just jumped in­to a Phase I/II study ear­ly this year. And its lead work with Bris­tol-My­ers could pro­vide a new and im­proved CT­LA-4 that is sup­posed to avoid the kind of off-tar­get tox­i­c­i­ty that has lim­it­ed Yer­voy’s use. That could at some point play a role in fu­ture Op­di­vo/Yer­voy com­bi­na­tions, like the one Bris­tol-My­ers is cur­rent­ly steer­ing in the clin­ic.

Cy­tomX has struck some mar­quee deals with a group of high-pro­file com­pa­nies, in­clud­ing Ab­b­Vie last year.

Mc­Carthy tells me he’s par­tic­u­lar­ly pumped by the idea that Bris­tol-My­ers’ $200 mil­lion will come in as com­plete­ly non-di­lu­tive rev­enue. The big biotech is pay­ing the freight on the new dis­cov­ery work, tak­ing no new eq­ui­ty in the deal and pro­vid­ing cash that can be in­vest­ed di­rect­ly in the com­pa­ny’s grow­ing pipeline.

That in-house ef­fort is led by a PD-L1 pro­gram that will look to emerge as a clear fa­vorite not on­ly to the ones al­ready on the mar­ket, but as well as the wave of fol­low-ups in the clin­ic at Pfiz­er/Mer­ck KGaA, As­traZeneca and more.

“We be­lieve the PD-L1 can be­come the cen­ter­piece of com­bi­na­tion im­nunother­a­pies mov­ing for­ward,” Mc­Carthy says.

That’s a bold state­ment, giv­en the hun­dreds of com­bi­na­tion ther­a­pies that are al­ready in the clin­ic as well as a long line­up of check­points that are un­der de­vel­op­ment. But Mc­Carthy says they have the pre­clin­i­cal da­ta need­ed to un­der­score the po­ten­tial. And he’s plan­ning to kick off a pair of com­bi­na­tion stud­ies with Yer­voy and Zelb­o­raf to demon­strate in re­al terms what he’s talk­ing about.

If he’s suc­cess­ful, there’s some ob­vi­ous up­side in this check­point fren­zied world we live in.

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Despite rapid advances in the field of immuno-oncology that have transformed the cancer treatment landscape, many cancer patients are still left behind.1,2 Not every person has access to innovative therapies designed specifically to treat his or her disease. Many currently available immuno-oncology-based approaches and chemotherapies have brought long-term benefits to some patients — but many patients still need other therapeutic options.3

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Ken Frazier, AP Images

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Mark Genovese (Stanford via Twitter)

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Pablo Legorreta, founder and CEO of Royalty Pharma AG, speaks at the annual Milken Institute Global Conference in Beverly Hills, California (Patrick T. Fallon/Bloomberg via Getty Images)

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